US OPEN: Markets Plunge on China's AI Fears, Apple Stands Strong

• US100 dives -2.34% to 21,395.48 leading broad market decline, with US500 falling -1.44% to 6,043.9 as DeepSeek sparks AI infrastructure concerns; VIX surges +7.68% to 17.53

• Nvidia tumbles 13% in record $465B market value wipeout after Chinese AI startup DeepSeek demonstrates efficient model, triggering widespread tech selloff

• Energy infrastructure stocks collapse with Vertiv (-25.9%), Vistra (-24.2%), and Constellation Energy (-19.3%) as DeepSeek raises questions about future data center power demands

• AT&T bucks market trend, rising 5.4% on strong Q4 subscriber growth and fiber additions, while Apple gains 2.5% as investors favor measured AI spending approach

• European markets show mixed performance with SUI20 (+1.23%) and ITA40 (+0.34%) in green, while NED25 (-0.50%) and EU50 (-0.30%) decline; VSTOXX rises +3.64% to 17.08

US Markets Under Pressure: US indices show significant declines, led by the US100 dropping -2.34% to 21395.48, while the US500 falls -1.44% to 6043.9. The US2000 shows a modest decline of -0.11% to 2316.5, and the US30 is slightly down -0.07% to 44570. Market volatility has spiked, with the VIX surging +7.68% to 17.53.

European Markets Mixed: European markets display mixed performance with a negative bias. The NED25 leads declines at -0.50% to 894.98, followed by AUT20 (-0.34% to 3823) and EU50 (-0.30% to 5208.6). However, some markets show resilience, with SUI20 gaining +1.23% to 12406, ITA40 up +0.34% to 36451, and UK100 adding +0.27% to 8496.0. The VSTOXX, Europe's volatility gauge, has jumped +3.64% to 17.08, reflecting increased market uncertainty.

S&P 500 Sectors Show Mixed Performance. Source: Bloomberg Financial LP

Current volatility observed on Wall Street. Source: xStation 

The Nasdaq-100 index, represented by the US100 contract, has broken below key support levels: the 23.6% Fibonacci retracement level, which aligns with the early December high of 21,668, the 50-day SMA at 21,370, and the 38.2% Fibonacci retracement level. These levels will now act as resistance for bulls attempting a rebound.

Bears, on the other hand, will target a retest of the 61.8% Fibonacci retracement level, which coincides with the lower Bollinger Band and the 50-day SMA, as key downside objectives. The RSI has entered a zone that has historically led to reversals in the index. Meanwhile, the MACD is tightening, signaling potential bearish divergence in the near future. Source: xStation

News:

• Nvidia (NVDA.US) plunges 13% in its largest-ever market value drop, erasing $465B after Chinese AI startup DeepSeek's efficient approach sparks concerns over AI infrastructure spending. The semiconductor giant's decline has rippled through the market, causing the S&P 500 to fall 2.3% and the Nasdaq 100 to drop 3.6%. Analysts at Jefferies warn that DeepSeek's model could disrupt the current AI business model, which relies heavily on high-end chips and extensive computing power.

• AT&T (T.US) rises 5.4% after beating Q4 expectations with strong subscriber growth. The telecom provider reported EPS of 54c, topping the 50c estimate, while revenue increased 0.9% to $32.3B. The company added 482,000 new monthly mobile subscribers and 307,000 fiber-optic customers, both exceeding analyst projections. Management reaffirms 2025 guidance and plans to complete the DirecTV sale by mid-2025.

• Constellation Energy (CEG.US) leads S&P 500 declines, tumbling 20% alongside other energy infrastructure stocks as DeepSeek's efficient AI model threatens data center power consumption outlook. Nuclear power providers and cooling system manufacturers face pressure as the Chinese startup demonstrates AI capabilities with reduced computing requirements, challenging assumptions about future energy demand from data centers.

• Apple (AAPL.US) gains 2.5%, bucking the tech sector decline as investors rotate toward companies with measured AI investments. While the Nasdaq 100 drops 3.1%, Apple's relatively conservative approach to AI spending and potential benefits from AI services through iPhone and hardware offerings appear to shield it from the broader tech selloff. The company is set to report Q1 results later this week.

• U.S. Housing Market shows resilience as new home sales climb 3.6% to 698,000 units in December, surpassing expectations of 675,000 units. The positive data signals continued momentum in housing market activity despite rising mortgage rates, with total 2024 sales reaching 683,000 units, up 2.5% from 2023.

• Energy Infrastructure Stocks face broad selloff as AI efficiency concerns ripple through the sector. Vertiv Holdings (VRT.US) plummets 25.9%, GE Vernova (GEV.US) drops 18.8%, and Vistra (VST.US) falls 24.2%. The dramatic decline reflects growing uncertainty about future power demands from data centers, particularly impacting companies focused on cooling solutions and sustainable power generation for AI infrastructure. The sector's selloff highlights the interconnected nature of the AI and energy markets, with efficient AI models potentially reducing the massive power requirements previously anticipated for the AI boom.

Other news coming from individual S&P 500 index companies. Source: Bloomberg Financial LP